On December 3rd the House passed H.R. 4154, the Permanent Estate Tax Relief for Families, Farms, and Small business Act of 2009 by a vote of 225 to 200.
The bill willl permently extend the tax exempton and the maximum tax at the current rate. As of 2009, the estate tax deduction is set at $3.5 million for individuals and $7 million for married couples and the maximum tax rate on estate is 45%.
Last week, Senator Pomeroy introduced H.R. 4154. The bill is scheduled for discussion and a vote later this week.
The language in H.R. 4154 is very short and to the point.
This Act may be cited as the “Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009″.
The bill includes this language: ” A bill to amend the Internal Revenue Code of 1986 to repeal the new carryover basis rules in order to prevent tax increases and the imposition of compliance burdens on many more estates than would benefit from repeal, to retain the estate tax with a $3,500,000 exemption, and for other purposes.”
If passed, the bill freezes the maximum gift tax rate and estate tax rate at the current 45%.
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Pay attention to the House of Representatives this week! It appears our government is getting ready to decide how to change the current federal estate tax laws over the next couple of weeks.
Will the House of Representatives recommend the 2009 $3.5 million federal estate tax exemption allowance become the permanent allowance starting in the year 2010? Or, will something different be recommended?
If the existing $3.5 million exemption becomes a permanent estate tax allowance, a married couple could use an A/B trust and pass $7.5 million to their heirs free of federal estate tax. Very few estates would be subject to any federal estate tax.
It may become more important to watch what the estate tax laws are in a particular state..and figure out what state not to die in. As the amount of the federal estate exemption allowance has grown from $1 million to $3.5 million over the last several years, some states have not have changed their inheritance or state estate tax laws. For some, the choice of residence may impact the amount of estate taxes due when someone dies.
A recent New York Times article listed 12 states that have some type of estate tax/inheritance tax. http://online.wsj.com/article/SB125694593227919879.html
I know someone who experienced the costly impact of New Jersey state inheritance tax laws. I’ve heard her say time and time again…”DON’T HAVE YOU PARENTS DIE IN NEW JERSEY!!!”
Stay tuned. We’ll be watching what is happening in Congress.. and keep you up to date on the latest developments.
Yes, the proposed health care reform bill is 2,000 pages long. Yes, Nancy Pelosi expects Congress to vote on this bill this weekend.
If you’ve been wondering what’s in it for you, this article in the Wall Street Journal turns the bill into language mere mortals can understand.
Of special interest is the language regarding Medicare…and the lack of any language regarding who pays for long term care.